The founder of Capriole Investments, Charles Edwards, has issued a stark warning about the growing number of companies holding Bitcoin and other cryptocurrencies on their balance sheets, known as Digital Asset Treasuries (DATs). Edwards cautioned that the DAT model is a "leverage explosion waiting to happen" and suggested that an unwind of these positions could make the collapses of Terra (LUNA) and FTX look like "child's play."
The number of companies adopting Bitcoin treasuries has climbed to around 200, a model popularized by Michael Saylor's Strategy (formerly MicroStrategy). While initially focused on Bitcoin, the 2025 boom saw DAT strategies expand to include assets like Ethereum (ETH) and Solana (SOL). Edwards drew a historical parallel, comparing the rapid growth of DATs to the investment trust bubble of the 1920s, which fueled a market boom that ultimately burst.
The warning comes as the crypto market downturn has already inflicted heavy losses on these corporate treasuries. According to data, DAT companies have collectively wiped out over $25 billion in value due to the recent price slide. Major losses stem from holdings in BTC, ETH, and SOL. Bitmine's treasury, heavily weighted toward Ethereum, saw losses balloon to $8.1 billion as ETH dipped below $2,000. Strategy's massive Bitcoin holdings, totaling 713,502 BTC, have also dipped into the red, with unrealized losses growing to around $6.2 billion.
The market pressure has caused most DAT companies to halt new accumulation. In the past 30 days, no Solana-focused DAT company bought more SOL, and potential Ethereum buyers stopped adding tokens, with Bitmine being the sole exception. Only a few Bitcoin-based DATs have sold, mostly from legacy miner reserves. The downturn is also reflected in the stock prices of these companies; Strategy's MSTR stock crashed to $110, and Bitmine's BMNR shares fell to a six-month low of $18.21.
Edwards highlighted the core risk: "There is no sustainable business model for generating yield on a fixed supply asset, which incentivizes leverage when mNAVs [market net asset values] collapse." With DATs now holding an estimated 12% of all Bitcoin, the analyst fears a coordinated unwind could have catastrophic consequences for the broader crypto market, far exceeding past crises.
